South Australia New South Wales Interconnector: Updated analysis

Richard Lenton, Jeremy Tustin

Electranet

Published 2019-02-11

ACIL Allen Consulting was engaged by ElectraNet to estimate the impact a new interconnector between New South Wales and South Australia would have on wholesale electricity prices and, therefore, on retail electricity bills.

This update to our report from July 2018 uses different input assumptions, which were modified to:

align more closely with the Australian Energy Market Operator’s (AEMO) Integrated System Plan which had not been published when the preliminary analysis was done

include the Redcliffs to Buronga line

reflect other updates to ACIL Allen’s standard assumption set.

The modelling was conducted using PowerMark, our proprietary model of the National Electricity Market. As with the preliminary analysis, the modelling indicates that the new interconnector can be expected to put downward pressure on the wholesale spot price of electricity in both South Australia and New South Wales, though the extent of that pressure has now changed due to the different input assumptions. Due to competition in the retail market retail prices can be expected to fall as well.

In this update report, we were also asked to estimate the impact the new interconnector would have on affected economies due to:

changes in wholesale, and therefore retail, electricity prices

benefits accruing from construction of the interconnector.

The analysis shows that, the changes in real economic output are broadly in line with the projected savings in electricity prices with benefits to both States. The areas that would ‘host’ the interconnector also benefit during the construction phase.